My beloved Members,
I. DESPITE NDA’s DEBACLE IN BIHAR POLLS, JAITLEY EXPECTS GST BILL TO GET NITISH’s SUPPORT
Officials in the Finance Ministry were awaiting the verdict of the Bihar Assembly Polls with bated breath to get a sense of how fast the Narendra Modi Govt. can push the Constitutional Amendment Bill to usher in GST in Parliament, which is scheduled to meet on November 26, 2015. Jaitley said defeat in Bihar is no set back to economy inasmuch as, development agenda to continue in future. Captains of industry expressed their worry over stuck bills yet their opinion is growth, reforms are imperative to take forward the economy. In this context, following views are of significant importance:
• Finance Ministry officials believe the Centre will face more resistance in Parliament.
• Further challenges could come from the polls due in Assam, West Bengal and U.P. in the near future.
• Most analysts say that the Government’s steps to boost growth have not taken pace with economy’s needs.
• Economists also want the Govt. to shift focus to farm sector and rural distress, and ‘away from foreign tours, FDI and bullet trains’.
• Mr. K.M. Mani, who is Finance Minister of Kerala and Chairman of the Empowered Committee of State FMs on GST, is involved in Bar bribery case and the High Court has ordered further probe in his case. In these circumstances, he has already resigned. So, the Empowered Committee of FMs on GST has become headless.
• On what should be the rate of GST, Jaitley said, “the lower the better.” He further said, “I am for a GST with a proper architecture, not for a GST with a defective architecture.”
• All in all, Jaitley expects GST Bill to get Nitish’s support. Let us be positive on this aspect.
II. INDIRECT TAX MOPUP SURGES 36.8% IN OCTOBER 2015
On the indirect tax front, there is a good news that it went up by 36.8% in October 2015. These collections continue to suggest a healthy growth in the underlying tax base. The recent hike in excise duty is going to add another Rs. 3,000 crore to the Treasury.
2. Thus, on the economic front, renowned industrialist Mr. Rahul Bajaj, opined: “I am relived Modi has 3.5 years more. Modi and Jaitley, therefore, have a long inning and they will not be discouraged from proceedings ahead with reforms in full speed. I will be surprised and very disappointed if the Congress does not respond in the same spirit, especially on GST”.
III. “CONSISTENT TAX POLICY WILL AID MAKE IN INDIA. NEED TO BE MORE INVESTOR-FRIENDLY”: RBI GOVERNOR
Speaking at a Seminar organised by Think-tank “Gateway House” in Mumbai on 19-10-2015, Raghuram Rajan said, “We need to make our tax regime more investor friendly. Let us make taxation more transparent, more predictable. Let us do all things necessary to allow our business to create what is needed.”
2. Rajan who had earlier pushed for a more domestic focus on manufacturing and suggested ‘Make For India’ as an alternative to ‘Make In India’, said that predictable taxation would help to achieve the Government’s objective of ‘Make In India’. For this purpose, we need to create the framework to do business easier.
3. The Governor’s above comments come at a time when the Government’s preparation for next Union Budget is gathering pace. Meantime, the Government has invited suggestions from industry associations for changes in duty structure, rates and broadening of tax base on both direct and indirect taxes. He further said, Finance Minister Arun Jaitley had reiterated the Government’s decision to reduce the rate of Corporate Tax from 30% to 25% over the next 4 years along with phasing out of tax exemptions and incentives.
IV. “INFLATION IN BHARAT AT 6.5%. BUT IN INDIA IT IS 4.5%” : HSBC REPORT
You will be surprised to read this report prepared by Global Financial Services Firm HSBC (reported in E.T. dt. 23-10-2015), saying notwithstanding the fact that overall inflation has fallen strikingly in the last few months, its benefit have not been equally distributed with the rate of price rise running higher in rural areas than in urban centres because of structural bottlenecks, says the report.
2. The report further says that rural inflation has not fallen as much as urban inflation and the ‘excess inflation’ that the rural India is facing is apparent across major sub-categories like fuel, core and food. “Structural bottlenecks are preventing rural Indians from benefiting fully from global disinflation”, HSBC said in a Research note, adding that this is seen in greater use of non-oil based fuels, where prices remains higher in rural homes.
3. India’s underlying inflation momentum at 5.5% year-on-year is running below RBI’s January Inflation target of 6%, it said. Details however showed it to be higher at 6.5% for Rural India, while for Urban India it stood at 4.5%, it added.
4. The report further noted that benefits of cheaper imports are not reaching rural areas as efficiently and steeper declined in the potential growth of rural India is likely driving its excess core inflation.
5. According to the said report, excess inflation in rural India arises from each of the main constituents – food, fuel, transportation and core inflation. The dramatic drop in oil prices have not passed on to the rural areas.
6. HSBC said rural Indians do not seem to have benefited as much as from food imports as their urban counterparts.
7. May we therefore appeal to Modi Govt. through ‘NITI Aayog’ call for this report study it minutely and take corrective action so that the rural Indians benefit on their daily necessities of life. Nonetheless, this report indicates the deficiency qua the research input of HSBC in the working of ‘NITI Aayog’, whose job was to have detected this serious distortion much earlier.
V. NO TOP JURIST MADE SC JUDGE IN 65 YRS: GOI“IT WAS WRONG TO IGNORE CONSTITUTIONAL PROVISION”
A. The Centre made the above points among its suggestions to better the collegium system, seeking a bigger pool of candidates than High Courts. In its 65 years of existence, the Supreme Court has never got a ‘distinguish jurist’ as a judge, making the Union Govt. pitch for the implementation of a constitutional provision mandating the appointment of this rare breed to the highest court of the land. The Constitution, under Article 124, provides for the appointment of SC judges from 3 sources – a person who has been a HC Judge for 5 years; who has been an HC advocate for 10 years; and, ‘a person who is, in the opinion of the President, a distinguished jurist.’ Interestingly, the Constitution does not provide for the appointment of a distinguish jurist – Article 217(2) says judicial officers and advocates with 10 years experience can be appointed as SC Judges.
The Centre said the collegium system has traditionally selected High Court Chief Justices for appointment as SC Judges, ignoring the two other pools of talent. Further, “Merit should not be sacrificed for seniority and a deserving candidate who may be a senior judge of an SC should also be considered for elevation to the Supreme Court without him becoming Chief Justice of a High Court.” (Source: TOI dt. 11-11-2015)
B. FREE LEGAL AID SHOULD BE BASIS FOR JUDGES’ SELECTION: PM
Prime Minister Narendra Modi recently said that his Government was committed to justice for all which was important for the overall development of the country. He was speaking at a convention of the National Legal Services Authority (NALSA) at Delhi in the presence of Justice T. S. Thakur who will assume the office of the CJI on December 2, 2015. Justice Thakur is at present the Chairman of NALSA.
2. On his suggestion of including the criterion of time spent by judges for 3 legal aid to the poor for judicial appointments, Modi said if such a provision was made, it will help develop a sense of accountability and sensibility towards the poor.
VI. FORTHCOMING EVENTS OF AIFTP
Last but not the least, may I invite your attention to the ensuing two important events viz. ‘Taxcon 2015 Conference’ and ‘18th National Convention’ at Hyderabad scheduled on 27th and 28th November, 2015 and 26th and 27th December, 2015, respectively, which you should not forget to attend with brother colleagues. I am confident that due to your wholehearted support, the above two events bound to be successful and worth remembering forever.
With best wishes and regards,
J. D. Nankani